A Dream Yet to Come True: Disparity of Healthcare Access in China

Irene J. Su, RN, MSN


Topics in Advanced Practice Nursing eJournal. 2007;7(3) 

In This Article

The Health Insurance Plans

The small percentages of Chinese citizens who have health insurance coverage are participants of 1 or more of the 4 available insurance plans:

  • Government employee health insurance,

  • Labor health insurance,

  • Rural cooperative medical system, and

  • Private insurance.

Government Employee Health Insurance

The best of all plans is the government employee health insurance, which, as the name suggests, is provided and funded by the government. Even though healthcare delivery is mostly a fee-for-service system, the government employee health insurance is somewhat similar to the health maintenance organization in the United States, where the insured are required to seek medical treatment within a network of preferred providers.

A characteristic of this plan is that patients pay very little cost out of pocket in exchange for freedom of choice for providers. However, of the 1.3 billion people in China, the government employee health insurance plan is reserved for only a small group of people who work for the government. According to government statistics, there were approximately 6.5 million active government employees in 2003, not including those retired from service. Relatively good compensation and a generous fringe benefit package such as government paid healthcare are a few reasons that make government employment a highly desirable and competitive position.

Labor Health Insurance

Labor health insurance is another plan designed for employees and immediate family members of various business entities in China. It is an employer-sponsored insurance plan in which a certain percentage of business revenue is designated for healthcare expenditure of the employees. Participants are required to contribute a percentage of copayment, and there is usually a cap that limits the annual expenses. Most employers require employees to pay hospital bills in advance and then reimburse the portion that is the employer's responsibility.

In this case, an employee's life course is tied in with the fate of the business for which he works. For instance, a kidney failure patient who was dependent on hemodialysis died after his employer filed for bankruptcy and was no longer able to cover the cost of his dialysis. In other words, employees of more profitable enterprises generally have better access to healthcare than those who are employed by less successful businesses. Labor health insurance is a voluntary system. The law does not mandate any employers, regardless of size, to provide health insurance for their employees. The Ministry of Labor and Social Security reported that the number of people covered by labor health insurance was 129.42 million in 1999.[6]

Rural Cooperative Medical System

The rural cooperative medical system (RCMS) is paid for by the participants in rural China. It was initially conceived in the 1950s when the people's communes provided for all basic needs of the agricultural population in China. The then Chinese Communist Party (CCP) Chief, Mao Tse-tung, was known to have said, "In medical and health work, put the emphasis on rural areas."[7]

For several decades, farmers were able to receive preventive and primary care by paramedical personnel called "barefoot doctors."[8] Although deficient in formal training, these barefoot doctors effectively provided much needed service to residents of the vastly populated countryside by means of numerous ambulatory village clinics funded by the RCMS. Such a grass roots campaign has proven to be highly successful in eradicating infectious diseases and enhancing the health status of rural residents.

Market economy has caused the crumble of the people's communes and, in turn, uprooted the RCMS. Since participation in RCMS is voluntary, the majority of farmers choose not to contribute to the premium pool. With the diminishing of RCMS, affordable medical care has literally vanished from the horizon. At the present time, it is estimated that over 90% of the rural population is uncovered by any insurance plan.[9]

Private Health Insurance

Private health insurance is a small emerging market sector with great potential for development. Participants include self-employed individuals and employees of private enterprises desiring supplementary coverage. The Chinese government made a commitment to open up its health insurance market when China joined the World Trade Organization in 2001. Ever since then, commercial health insurance plans are slowly increasing.

Between 1998 and 2003, the urban population covered by commercial plans rose from 3.3% to 5.6%.[10] A national survey of privately owned enterprises indicated that 33.4% of these businesses participated in commercial health insurance plans in 2003.[11] Without a mandatory policy for employer health insurance coverage, enrollment will continue to remain low.

Private hospitals are relatively new players in China today despite the fact that they have a long history in China before the communist takeover in 1949. Statistics from the Ministry of Health showed that by the end of 2002, China had a total of 297,000 hospitals, of which[12]:

  • 32% are state-run,

  • 18% are collectively owned,

  • 46% are private, and

  • 4% have overseas investment.

Although the percentage of private hospitals seems big, 90% are small walk-in clinics.[12]

Establishing a private hospital in China is a huge undertaking that requires overcoming various bureaucratic barriers. These hospitals are neither given any government funding nor are they included in the preferred provider network of major insurance plans. They are, therefore, for-profit organizations that serve cash paying consumers on a fee-for-service basis.

Consultation fees for outpatient visits are generally regulated by the government for all hospitals, but private hospitals have a certain degree of flexibility for their fee schedules. To solve the reimbursement issue, some clinicians have chosen to enter into contractual relationships with public hospitals, which are in the preferred provider network.

The contractual agreement is profit-sharing in nature. For instance, a retired internal medicine physician operated a clinic affiliated with a community hospital in Foshan, Guangdong Province. By her account, she saw approximately 80 to 100 patients a day on average and retained 60% of her consultation fees. The other 40% went to the hospital that assumed administrative duties and covered overhead expenditures of the practice. Private hospitals have helped to lessen the burden of public hospitals and have played an important role in improving healthcare access of the Chinese people.


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